This has to do with how Notepad recognizes the end of a line. In Notepad, only a carriage-return character followed by a line-feed character is interpreted as the end-of-line marker. Other systems like Mac OS X and Linux use only the line-feed character. Whenever Notepad opens a file that uses only the line-feed character (for example, if the file was originally written on a non-Windows system) it doesn't detect a proper end-of-line marker and so interprets the text as being on a single long line.
Wordpad supports many end-of-line conventions, which is why it can display both the Windows and Mac/Linux conventions correctly. You might want to look at one of the many Notepad replacement editors available online. My favorite is Notepad++, which includes tools to convert a file between different end-of-line conventions.
Edited by Andrew, 15 April 2013 - 08:39 PM.